G.R. No. L-66935 November 11, 1985
ISABELA ROQUE, doing busines under the name and style of Isabela
Roque Timber Enterprises and ONG CHIONG, petitioners, vs.HON.
INTERMEDIATE APPELATE COURT and PIONEER INSURANCE AND SURETY
CORPORATION, respondent.
GUTIERREZ, JR., J.:This petition for certiorari asks for the
review of the decision of the Intermediate Appellate Court which
absolved the respondent insurance company from liability on the
grounds that the vessel carrying the insured cargo was unseaworthy
and the loss of said cargo was caused not by the perils of the sea
but by the perils of the ship.
On February 19, 1972, the Manila Bay Lighterage Corporation
(Manila Bay), a common carrier, entered into a contract with the
petitioners whereby the former would load and carry on board its
barge Mable 10 about 422.18 cubic meters of logs from Malampaya
Sound, Palawan to North Harbor, Manila. The petitioners insured the
logs against loss for P100,000.00 with respondent Pioneer Insurance
and Surety Corporation (Pioneer).
On February 29, 1972, the petitioners loaded on the barge, 811
pieces of logs at Malampaya Sound, Palawan for carriage and
delivery to North Harbor, Port of Manila, but the shipment never
reached its destination because Mable 10 sank with the 811 pieces
of logs somewhere off Cabuli Point in Palawan on its way to Manila.
As alleged by the petitioners in their complaint and as found by
both the trial and appellate courts, the barge where the logs were
loaded was not seaworthy such that it developed a leak. The
appellate court further found that one of the hatches was left open
causing water to enter the barge and because the barge was not
provided with the necessary cover or tarpaulin, the ordinary splash
of sea waves brought more water inside the barge.
On March 8, 1972, the petitioners wrote a letter to Manila Bay
demanding payment of P150,000.00 for the loss of the shipment plus
P100,000.00 as unrealized profits but the latter ignored the
demand. Another letter was sent to respondent Pioneer claiming the
full amount of P100,000.00 under the insurance policy but
respondent refused to pay on the ground that its hability depended
upon the "Total loss by Total Loss of Vessel only". Hence,
petitioners commenced Civil Case No. 86599 against Manila Bay and
respondent Pioneer.
After hearing, the trial court found in favor of the
petitioners. The dispositive portion of the decision reads:
FOR ALL THE FOREGOING, the Court hereby rendered judgment as
follows:
(a) Condemning defendants Manila Bay Lighterage Corporation and
Pioneer Insurance and Surety Corporation to pay plaintiffs, jointly
and severally, the sum of P100,000.00;
(b) Sentencing defendant Manila Bay Lighterage Corporation to
pay plaintiff, in addition, the sum of P50,000.00, plus P12,500.00,
that the latter advanced to the former as down payment for
transporting the logs in question;
(c) Ordering the counterclaim of defendant Insurance against
plaintiffs, dismissed, for lack of merit, but as to its cross-claim
against its co-defendant Manila Bay Lighterage Corporation, the
latter is ordered to reimburse the former for whatever amount it
may pay the plaintiffs as such surety;
(d) Ordering the counterclaim of defendant Lighterage against
plaintiffs, dismissed for lack of merit;
(e) Plaintiffs' claim of not less than P100,000.00 and
P75,000.00 as exemplary damages are ordered dismissed, for lack of
merits; plaintiffs' claim for attorney's fees in the sum of
P10,000.00 is hereby granted, against both defendants, who are,
moreover ordered to pay the costs; and
(f) The sum of P150,000.00 award to plaintiffs, shall bear
interest of six per cent (6%) from March 25, 1975, until amount is
fully paid.
Respondent Pioneer appealed to the Intermediate Appellate Court.
Manila Bay did not appeal. According to the petitioners, the
transportation company is no longer doing business and is without
funds.
During the initial stages of the hearing, Manila Bay informed
the trial court that it had salvaged part of the logs. The court
ordered them to be sold to the highest bidder with the funds to be
deposited in a bank in the name of Civil Case No. 86599.
On January 30, 1984, the appellate court modified the trial
court's decision and absolved Pioneer from liability after finding
that there was a breach of implied warranty of seaworthiness on the
part of the petitioners and that the loss of the insured cargo was
caused by the "perils of the ship" and not by the "perils of the
sea". It ruled that the loss is not covered by the marine insurance
policy.
After the appellate court denied their motion for
reconsideration, the petitioners filed this petition with the
following assignments of errors:
I
THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT IN CASES
OF MARINE CARGO INSURANCE, THERE IS A WARRANTY OF SEAWORTHINESS BY
THE CARGO OWNER.
II
THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE LOSS
OF THE CARGO IN THIS CASE WAS CAUSED BY "PERILS OF THE SHIP" AND
NOT BY "PERILS OF THE SEA."
III
THE INTERMEDIATE APPELLATE COURT ERRED IN NOT ORDERING THE
RETURN TO PETITIONER OF THE AMOUNT OF P8,000.00 WHICH WAS DEPOSITED
IN THE TRIAL COURT AS SALVAGE VALUE OF THE LOGS THAT WERE
RECOVERED.
In their first assignment of error, the petitioners contend that
the implied warranty of seaworthiness provided for in the Insurance
Code refers only to the responsibility of the shipowner who must
see to it that his ship is reasonably fit to make in safety the
contemplated voyage.
The petitioners state that a mere shipper of cargo, having no
control over the ship, has nothing to do with its seaworthiness.
They argue that a cargo owner has no control over the structure of
the ship, its cables, anchors, fuel and provisions, the manner of
loading his cargo and the cargo of other shippers, and the hiring
of a sufficient number of competent officers and seamen. The
petitioners' arguments have no merit.
There is no dispute over the liability of the common carrier
Manila Bay. In fact, it did not bother to appeal the questioned
decision. However, the petitioners state that Manila Bay has ceased
operating as a firm and nothing may be recovered from it. They are,
therefore, trying to recover their losses from the insurer.
The liability of the insurance company is governed by law.
Section 113 of the Insurance Code provides:
In every marine insurance upon a ship or freight, or freightage,
or upon any thing which is the subject of marine insurance, a
warranty is implied that the ship is seaworthy.
Section 99 of the same Code also provides in part.
Marine insurance includes:
(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights,
cargoes, merchandise, ...
From the above-quoted provisions, there can be no mistaking the
fact that the term "cargo" can be the subject of marine insurance
and that once it is so made, the implied warranty of seaworthiness
immediately attaches to whoever is insuring the cargo whether he be
the shipowner or not.
As we have ruled in the case of Go Tiaoco y Hermanos v. Union
Insurance Society of Canton (40 Phil. 40):
The same conclusion must be reached if the question be discussed
with reference to the seaworthiness of the ship. It is universally
accepted that in every contract of insurance upon anything which is
the subject of marine insurance, a warranty is implied that the
ship shall be seaworthy at the time of the inception of the voyage.
This rule is accepted in our own Insurance Law (Act No. 2427, sec.
106). ...
Moreover, the fact that the unseaworthiness of the ship was
unknown to the insured is immaterial in ordinary marine insurance
and may not be used by him as a defense in order to recover on the
marine insurance policy.
As was held in Richelieu and Ontario Nav. Co. v. Boston Marine,
Inc., Co. (136 U.S. 406):
There was no look-out, and both that and the rate of speed were
contrary to the Canadian Statute. The exception of losses
occasioned by unseaworthiness was in effect a warranty that a loss
should not be so occasioned, and whether the fact of
unseaworthiness were known or unknown would be immaterial.
Since the law provides for an implied warranty of seaworthiness
in every contract of ordinary marine insurance, it becomes the
obligation of a cargo owner to look for a reliable common carrier
which keeps its vessels in seaworthy condition. The shipper of
cargo may have no control over the vessel but he has full control
in the choice of the common carrier that will transport his goods.
Or the cargo owner may enter into a contract of insurance which
specifically provides that the insurer answers not only for the
perils of the sea but also provides for coverage of perils of the
ship.
We are constrained to apply Section 113 of the Insurance Code to
the facts of this case. As stated by the private respondents:
In marine cases, the risks insured against are "perils of the
sea" (Chute v. North River Ins. Co., Minn214 NW 472, 55 ALR 933).
The purpose of such insurance is protection against contingencies
and against possible damages and such a policy does not cover a
loss or injury which must inevitably take place in the ordinary
course of things. There is no doubt that the term 'perils of the
sea' extends only to losses caused by sea damage, or by the
violence of the elements, and does not embrace all losses happening
at sea. They insure against losses from extraordinary occurrences
only, such as stress of weather, winds and waves, lightning,
tempests, rocks and the like. These are understood to be the
"perils of the sea" referred in the policy, and not those ordinary
perils which every vessel must encounter. "Perils of the sea" has
been said to include only such losses as are of extraordinary
nature, or arise from some overwhelming power, which cannot be
guarded against by the ordinary exertion of human skill and
prudence. Damage done to a vessel by perils of the sea includes
every species of damages done to a vessel at sea, as distinguished
from the ordinary wear and tear of the voyage, and distinct from
injuries suffered by the vessel in consequence of her not being
seaworthy at the outset of her voyage (as in this case). It is also
the general rule that everything which happens thru the inherent
vice of the thing, or by the act of the owners, master or shipper,
shall not be reputed a peril, if not otherwise borne in the policy.
(14 RCL on Insurance, Sec. 384, pp. 1203- 1204; Cia. de Navegacion
v. Firemen's Fund Ins. Co., 277 US 66, 72 L. ed. 787, 48 S. Ct.
459).
With regard to the second assignment of error, petitioners
maintain, that the loss of the cargo was caused by the perils of
the sea, not by the perils of the ship because as found by the
trial court, the barge was turned loose from the tugboat east of
Cabuli Point "where it was buffeted by storm and waves." Moreover,
petitioners also maintain that barratry, against which the cargo
was also insured, existed when the personnel of the tugboat and the
barge committed a mistake by turning loose the barge from the
tugboat east of Cabuli Point. The trial court also found that the
stranding and foundering of Mable 10 was due to improper loading of
the logs as well as to a leak in the barge which constituted
negligence.
On the contention of the petitioners that the trial court found
that the loss was occasioned by the perils of the sea characterized
by the "storm and waves" which buffeted the vessel, the records
show that the court ruled otherwise. It stated:
xxx xxx xxx
... The other affirmative defense of defendant Lighterage, 'That
the supposed loss of the logs was occasioned by force majeure...
"was not supported by the evidence. At the time Mable 10 sank,
there was no typhoon but ordinary strong wind and waves, a
condition which is natural and normal in the open sea. The evidence
shows that the sinking of Mable 10 was due to improper loading of
the logs on one side so that the barge was tilting on one side and
for that it did not navigate on even keel; that it was no longer
seaworthy that was why it developed leak; that the personnel of the
tugboat and the barge committed a mistake when it turned loose the
barge from the tugboat east of Cabuli point where it was buffeted
by storm and waves, while the tugboat proceeded to west of Cabuli
point where it was protected by the mountain side from the storm
and waves coming from the east direction. ..."
In fact, in the petitioners' complaint, it is alleged that "the
barge Mable 10 of defendant carrier developed a leak which allowed
water to come in and that one of the hatches of said barge was
negligently left open by the person in charge thereof causing more
water to come in and that "the loss of said plaintiffs' cargo was
due to the fault, negligence, and/or lack of skill of defendant
carrier and/or defendant carrier's representatives on barge Mable
10."
It is quite unmistakable that the loss of the cargo was due to
the perils of the ship rather than the perils of the sea. The facts
clearly negate the petitioners' claim under the insurance policy.
In the case of Go Tiaoco y Hermanos v. Union Ins. Society of
Canton, supra, we had occasion to elaborate on the term "perils of
the ship." We ruled:
It must be considered to be settled, furthermore, that a loss
which, in the ordinary course of events, results from the natural
and inevitable action of the sea, from the ordinary wear and tear
of the ship, or from the negligent failure of the ship's owner to
provide the vessel with proper equipment to convey the cargo under
ordinary conditions, is not a peril of the sea. Such a loss is
rather due to what has been aptly called the "peril of the ship."
The insurer undertakes to insure against perils of the sea and
similar perils, not against perils of the ship. As was well said by
Lord Herschell in Wilson, Sons & Co. v. Owners of Cargo per the
Xantho ([1887], 12 A. C., 503, 509), there must, in order to make
the insurer liable, be some casualty, something which could not be
foreseen as one of the necessary incidents of the adventure. The
purpose of the policy is to secure an indemnity against accidents
which may happen, not against events which must happen.
In the present case the entrance of the sea water into the
ship's hold through the defective pipe already described was not
due to any accident which happened during the voyage, but to the
failure of the ship's owner properly to repair a defect of the
existence of which he was apprised. The loss was therefore more
analogous to that which directly results from simple
unseaworthiness than to that which result from the perils of the
sea.
xxx xxx xxx
Suffice it to say that upon the authority of those cases there
is no room to doubt the liability of the shipowner for such a loss
as occurred in this case. By parity of reasoning the insurer is not
liable; for generally speaking, the shipowner excepts the perils of
the sea from his engagement under the bill of lading, while this is
the very perils against which the insurer intends to give
protection. As applied to the present case it results that the
owners of the damaged rice must look to the shipowner for redress
and not to the insurer.
Neither can petitioners allege barratry on the basis of the
findings showing negligence on the part of the vessel's crew.
Barratry as defined in American Insurance Law is "any willful
misconduct on the part of master or crew in pursuance of some
unlawful or fraudulent purpose without the consent of the owners,
and to the prejudice of the owner's interest." (Sec. 171, U.S.
Insurance Law, quoted in Vance, Handbook on Law of Insurance, 1951,
p. 929.)
Barratry necessarily requires a willful and intentional act in
its commission. No honest error of judgment or mere negligence,
unless criminally gross, can be barratry. (See Vance on Law of
Insurance, p. 929 and cases cited therein.)
In the case at bar, there is no finding that the loss was
occasioned by the willful or fraudulent acts of the vessel's crew.
There was only simple negligence or lack of skill. Hence, the
second assignment of error must likewise be dismissed.
Anent the third assignment of error, we agree with the
petitioners that the amount of P8,000.00 representing the amount of
the salvaged logs should have been awarded to them. However, this
should be deducted from the amounts which have been adjudicated
against Manila Bay Lighterage Corporation by the trial court.
WHEREFORE, the decision appealed from is AFFIRMED with the
modification that the amount of P8,000.00 representing the value of
the salvaged logs which was ordered to be deposited in the Manila
Banking Corporation in the name of Civil Case No. 86599 is hereby
awarded and ordered paid to the petitioners. The liability adjudged
against Manila Bay Lighterage Corporation in the decision of the
trial court is accordingly reduced by the same amount.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, De la Fuente and
Patajo, JJ., concur.Relova, J., is on leave.
G.R. No. 13983 September 1, 1919LA RAZON SOCIAL "GO TIAOCO Y
HERMANOS," plaintiff-appellant, vs.UNION INSURANCE SOCIETY OF
CANTON, LTD., defendant-appellee.
P. E. del Rosario and W. F. Mueller for appellant.Crossfield and
O'Brien for appellee.STREET, J.:This is an action on a policy of
marine insurance issued by the Union Insurance Society of Canton,
Ltd., upon a cargo of rice belonging to the plaintiffs, Go Tiaoco
Brothers, which was transported in the early days of May, 1915, on
the steamship Hondagua from the port of Saigon to Cebu. On
discharging the rice from one of the compartments in the after
hold, upon arrival at Cebu, it was discovered that one thousand
four hundred seventy-three sacks and been damages by sea water. The
loss so resulting to the owners of rice, after proper deduction had
been made for the portion saved, was three thousand eight hundred
seventy five pesos and twenty-five centavos (P3,875.25). The trial
court found that the inflow of the sea water during the voyage was
due to a defect in one of the drain pipes of the ship and concluded
that the loss was not covered by the policy of insurance. Judgment
was accordingly entered in favor of the defendant and the
plaintiffs appealed.
The facts with reference to the manner in which the sea water
effected entrance into the hold may be summarized as follows,
substantially in accordance with the findings of the trial
court:
The drain pipe which served as a discharge from the water closet
passed down through the compartment where the rice in question was
stowed and thence out to sea through the wall of the compartment,
which was a part of the wall of the ship. The joint or elbow where
the pipe changed its direction was of cast iron; and in course of
time it had become corroded and abraded until a longitudinal
opening had appeared in the pipe about one inch in length. This
hole had been in existence before the voyage was begun, and an
attempt had been made to repair it by filling with cement and
bolting over it a strip of iron. The effect of loading the boat was
to submerge the vent, or orifice, of the pipe until it was about 18
inches or 2 feet below the level of the sea. As a consequence the
sea water rose in the pipe. Navigation under these conditions
resulted in the washing out of the cement-filling from the action
of the sea water, thus permitting the continued flow of the salt
water into the compartment of rice.
The court found in effect that the opening above described had
resulted in course of time from ordinary wear and tear and not from
the straining of the ship in rough weather on that voyage. The
court also found that the repairs that had been made on the pipe
were slovenly and defective and that, by reason of the condition of
this pipe, the ship was not properly equipped to receive the rice
at the time the voyage was begun. For this reason the court held
that the ship was unseaworthy.
The policy of insurance was signed upon a form long in use among
companies engaged in maritime insurance. It purports to insure the
cargo from the following among other risks: "Perils . . . of the
seas, men of war, fire, enemies, pirates, rovers, thieves,
jettisons, . . . barratry of the master and mariners, and of all
other perils, losses, and misfortunes that have or shall come to
the hurt, detriment, or damage of the said goods and merchandise or
any part thereof."
The question whether the insurer is liable on this policy for
the loss caused in the manner above stated presents two phases
which are in a manner involved with each other. One has reference
to the meaning of the expression "perils of the seas and all other
perils, losses, and misfortunes," as used in the policy; the other
has reference to the implied warranty, on the part of the insured,
as to the seaworthiness of the ship.
The meaning of the expression "perils . . . of the seas . . .
and all other perils, losses, and misfortunes," used in describing
the risks covered by policies of marine insurance, has been the
subject of frequent discussion; and certain propositions relative
thereto are now so generally accepted as to be considered
definitely settled.
In the first place it is determined that the words "all other
perils, losses, and misfortunes" are to be interpreted as covering
risks which are of like kind (ejusdem generis) with the particular
risks which are enumerated in the preceding part of the same clause
of the contract. "According to the ordinary rules of construction,"
said Lord Macnaghten in Thames and Mersey Marine Insurance Co. vs.
Hamilton, Fraser & Co. ([1887]), 12 A. C., 484, 501), "these
words must be interpreted with reference to the words which
immediately precede them. They were no doubt inserted in order to
prevent disputes founded on nice distinctions. Their office is to
cover in terms whatever may be within the spirit of the cases
previously enumerated, and so they have a greater or less effect as
a narrower or broader view is taken of those cases. For example, if
the expression 'perils of the seas' is given its widest sense the
general words have little or no effect as applied to that case. If
no the other hand that expression is to receive a limited
construction, as apparently it did in Cullen vs. Butler (5 M. &
S., 461), and loss by perils of the seas is to be confined to loss
ex marinae tempestatis discrimine, the general words become most
important. But still, ever since the case of Cullen vs. Butler,
when they first became the subject of judicial construction, they
have always been held or assumed to be restricted to cases 'akin
to' or resembling' or 'of the same kind as' those specially
mentioned. I see no reason for departing from this settled rule. In
marine insurance it is above all things necessary to abide by
settled rules and to avoid anything like novel refinements or a new
departure."
It must be considered to be settled, furthermore, that a loss
which, in the ordinary course of events, results from the natural
and inevitable action of the sea, from the ordinary wear and tear
of the ship, or from the negligent failure of the ship's owner to
provide the vessel with proper equipment to convey the cargo under
ordinary conditions, is not a peril of the sea. Such a loss is
rather due to what has been aptly called the "peril of the ship."
The insurer undertakes to insure against perils of the sea and
similar perils, not against perils of the ship. As was well said by
Lord Herschell in Wilson, Sons & Co. vs. Owners of Cargo per
the Xantho ([1887], 12 A. C., 503,509), there must, in order to
make the insurer liable, be "some casualty, something which could
not be foreseen as one of the necessary incidents of the adventure.
The purpose of the policy is to secure an indemnity against
accidents which may happen, not against events which must
happen."
In the present case the entrance of the sea water into the
ship's hold through the defective pipe already described was not
due to any accident which happened during the voyage, but to the
failure of the ship's owner properly to repair a defect of the
existence of which he was apprised. The loss was therefore more
analogous to that which directly results from simple
unseaworthiness than to that which results from perils of the
sea.
The first of the two decisions of the House of Lords from which
we have quoted (Thames and Mersey Marine Insurance Co. vs.
Hamilton, Fraser & Co. [1887], 12 A. C., 484) arose upon the
following state of facts: In March, 1884, the Inchmaree was lying
at anchor off Diamond Island and was about to start upon her
voyage. To this end it became necessary to fill up her boilers.
There was a donkey-engine with a donkey-pump on board, and the
donkey-engine was set to pump up water from the sea into the
boilers. Those in charge of the operation did not take the
precaution of making sure that the valve of the aperture leading
into one of the boilers was open. This valve happened to be closed.
The result was that the water being unable to make its way into the
boiler was forced back and split the air-chamber and so disabled
the pump. It was held that whether the injury occurred through
negligence or accidentally without negligence, it was not covered
by the policy, since the loss did not fall either under the words
"perils of the seas" or under the more general words "all other
perils, losses, and misfortunes." Lord Bramwell, in the course of
his opinion quoted with approbation as definition given by Lopes
L.J. in Pandorf vs. Hamilton (16 Q. B. D., 629), which is as
follows: In a sea-worthy ship damage to goods caused by the action
of the sea during transit not attributable to the fault of anybody,
is a damage from a peril of the sea.
The second of the decision from the House of Lords from which we
have quoted (Wilson, Son & Co. vs. owners of Cargo per the
Xantho [1887], 12 A. C., 503) arose upon the following facts: The
owners of certain cargo embarked the same upon the steamship
Xantho. A collision took place in a fog between this vessel and
another ship, Valuta. An action was thereupon instituted by the
owners of the cargo against the owners of the Xantho. It was held
that if the collision occurred without fault on the part of the
carrying ship, the owners were not liable for the value of the
cargo lost by such collision.
Still another case was decided in the House of Lords upon the
same date as the preceding two, which is equally instructive as the
others upon the question now under consideration. We refer to
Hamilton, Fraser & Co. vs. Pandorf & Co. ([1887], 12 A. C.,
518), where it appeared that rice was shipped under a charter party
and bills of lading which expected "dangers and accident of the
sea." During the voyage rats gnawed a hole in a pipe on board the
ship, whereby sea water effected an entrance into the ship's hold
and damaged the rice. It appeared that there was no neglect or
default on the part of the shipowners or their servants in the
matter of attending to the cargo. It was held that this loss
resulted from an accident or peril of the sea and that the
shipowners were not responsible. Said Bramwell: "No question of
negligence exists in this case. The damage was caused by the sea in
the course of navigation with no default in any one. I am,
therefore, of opinion that the damage was caused by peril of the
sea within the meaning of the bill of lading." The point which
discriminates this decision from that now before us is that in the
present case the negligence of the shipowners must be accepted as
established. Undoubtedly, if in Hamilton, Fraser & Co. vs.
Pandorf & Co. [1887], 12 A. C., 518), it had appeared that this
hold had been gnawed by the rats prior to this voyage and the
owners, after having their attention directed to it, had failed to
make adequate repairs, the ship would have been liable.
The three decisions in the House of Lords above referred to
contain elaborate discussions concerning the liability of
shipowners and insurers, respectively, for damage happening to
cargo in the course of a sea voyage; and it would be presumptuous
for us to undertake to add to what has been there said by the
learned judges of that high court. Suffice it to say that upon the
authority of those cases there is no room to doubt the liability of
the shipowner for such a loss as occurred in this case. By parity
of reasoning the insurer is not liable; for, generally speaking,
the shipowner excepts the perils of the sea from his engagement
under the bill of lading, while this is the very peril against
which the insurer intends to give protection. As applied to the
present case it results that the owners of the damages rice must
look to the shipowner for redress and not to the insurer.
The same conclusion must be reached if the question be discussed
with reference to the seaworthiness of the ship. It is universally
accepted that in every contract of insurance upon anything which is
the subject of marine insurance, a warranty is implied that the
ship shall be seaworthy at the time of the inception of the voyage.
This rule is accepted in our own Insurance Law (Act No. 2427, sec.
106). It is also well settled that a ship which is seaworthy for
the purpose of insurance upon the ship may yet be unseaworthy for
the purpose of insurance upon the cargo (Act No. 2427, sec. 106).
In Steel vs. State Line Steamship Co. ([1877], L. R. 3 A. C., 72),
a cargo of wheat was laden upon a ship which had a port-hole
insecurely fastened at the time of the lading. This port-hole was
about one foot above the water line; and in the course of the
voyage sea water entered the compartment where the wheat was stores
and damaged the cargo. It was held that the ship was unseaworthy
with reference to the cargo in question. In Gilroy, Sons & Co.
vs. Price & Co. ([1893], 18 A. C., 56), a cargo of jute was
shipped. During the voyage the vessel encountered stormy weather,
as a consequence of which the cargo shifted its position and broke
a pipe leading down through the hold from the water closet, with
result that water entered the vessel and the jute was damaged. It
was found that the cargo was improperly stowed and that the owners
of the ship were chargeable with negligence for failure to protect
the pipe by putting a case over it. It was accordingly held that
the ship was unseaworthy.
From what has been said it follows that the trial court
committed no error in absolving the defendant from the complaint.
The judgment must therefore be affirmed, and it is so ordered, with
costs.
Arellano, C.J., Johnson, Araullo, Malcolm, Avacena and Moir,
JJ., concur.
Separate OpinionsTORRES, J., dissenting:
And is of the opinion that the judgment appealed from should be
reversed.
G.R. No. 84507 March 15, 1990
CHOA TIEK SENG, doing business under the name and style of
SENG'S COMMERCIAL ENTERPRISES, petitioner, vs.HON. COURT OF
APPEALS, FILIPINO MERCHANTS' INSURANCE COMPANY, INC., BEN LINES
CONTAINER, LTD. AND E. RAZON, INC., respondents.
Lapuz Law Office for petitioner.
De Santos, Balgoz & Perez for respondent Filipino Merchants'
Insurance Company, Inc.
Marilyn Cacho-Noe for respondent Ben Lines Container, Ltd.
GANCAYCO, J.:This is an appeal from a decision of the Court of
Appeals dated February 18, 1988 in CA-G.R. CV No. 09627 which
affirmed the decision of the Regional Trial Court (RTC) of Manila
which in turn dismissed the complaint. 1On November 4, 1976
petitioner imported some lactose crystals from Holland. The
importation involved fifteen (15) metric tons packed in 600 6-ply
paper bags with polythelene inner bags, each bag at 25 kilos net.
The goods were loaded at the port at Rotterdam in sea vans on board
the vessel "MS Benalder' as the mother vessel, and thereafter
aboard the feeder vessel "Wesser Broker V-25" of respondent Ben
Lines Container, Ltd. (Ben Lines for short). The goods were insured
by the respondent Filipino Merchants' Insurance Co., Inc.
(insurance company for short) for the sum of P98,882.35, the
equivalent of US$8,765.00 plus 50% mark-up or US$13,147.50, against
all risks under the terms of the insurance cargo policy. Upon
arrival at the port of Manila, the cargo was discharged into the
custody of the arrastre operator respondent E. Razon, Inc. (broker
for short), prior to the delivery to petitioner through his broker.
Of the 600 bags delivered to petitioner, 403 were in bad order. The
surveys showed that the bad order bags suffered spillage and loss
later valued at P33,117.63.
Petitioner filed a claim for said loss dated February 16, 1977
against respondent insurance company in the amount of P33,117.63 as
the insured value of the loss.
Respondent insurance company rejected the claim alleging that
assuming that spillage took place while the goods were in transit,
petitioner and his agent failed to avert or minimize the loss by
failing to recover spillage from the sea van, thus violating the
terms of the insurance policy sued upon; and that assuming that the
spillage did not occur while the cargo was in transit, the said 400
bags were loaded in bad order, and that in any case, the van did
not carry any evidence of spillage.
Hence, petitioner filed the complaint dated August 2, 1977 in
the Regional Trial Court of Manila against respondent insurance
company seeking payment of the sum of P33,117.63 as damages plus
attorney's fees and expenses of litigation. In its answer,
respondent insurance company denied all the material allegations of
the complaint and raised several special defenses as well as a
compulsory counterclaim. On February 24, 1978, respondent insurance
company filed a third-party complaint against respondents Ben Lines
and broker. Respondent broker filed its answer to the third-party
complaint denying liability and arguing, among others, that the
petitioner has no valid cause of action against it. Similarly, Ben
Lines filed its answer denying any liability and a special defense
arguing that respondent insurance company was not the proper party
in interest and has no connection whatsoever with Ben Lines
Containers, Ltd. and that the third-party complaint has prescribed
under the applicable provisions of the Carriage of Goods by Sea
Act.
On November 6, 1979, respondent Ben Lines filed a motion for
preliminary hearing on the affirmative defense of prescription. In
an order dated February 28, 1980, the trial court deferred
resolution of the aforesaid motion after trial on the ground that
the defense of prescription did not appear to be indubitable.
After the pre-trial conference and trial on the merits, on March
31, 1986, the court a quo rendered a judgment dismissing the
complaint, the counterclaim and the third-party complaint with
costs against the petitioner.
Hence, the appeal to the Court of Appeals by petitioner which,
in due course, as aforestated, affirmed the judgment of the trial
court.
A motion for reconsideration of said judgment was denied by the
appellate court in a resolution dated August 1, 1988.
Petitioner now filed this petition for review on certiorari in
this Court predicated on the following grounds:
I
RESPONDENT COURT ERRED IN HOLDING THAT THE INSURED SHIPMENT DID
NOT SUSTAIN ANY DAMAGE/LOSS DESPITE ADMISSION THEREOF ON THE PART
OF RESPONDENT INSURANCE COMPANY AND THE FINDING OF THE LATTER'S
SURVEYORS.
II
RESPONDENT COURT ERRED IN HOLDING THAT AN "ALL RISKS" COVERAGE
COVERS ONLY LOSSES OCCASIONED BY OR RESULTING FROM "EXTRA AND
FORTUITOUS EVENTS" DESPITE THE CLEAR AND UNEQUIVOCAL DEFINITION OF
THE TERM MADE AND CONTAINED IN THE POLICY SUED UPON.
III
THE HOLDING OF RESPONDENT COURT THAT AN "ALL RISKS" COVERAGE
COVERS LOSSES OCCASIONED BY AND RESULTING FROM "EXTRA AND
FORTUITOUS EVENTS" CONTRADICTS THE RULING OF THE SAME COURT IN
ANOTHER CASE WHERE THE DEFINITION OF THE TERM "ALL RISKS"/ STATED
IN THE POLICY WAS MADE TO CONTROL HENCE THE NEED FOR REVIEW. 2The
petition is impressed with merit.
The appellate court, in arriving at the conclusion that there
was no damage suffered by the cargo at the time of the devanning
thereof, held as follows:
Appellant argued that the cargo in question sustained damages
while still in the possession of the carrying vessel, because as
his appointed surveyor reported, Worldwide Marine Survey
Corporation, at the time of devanning at the pier, 403 bags were
already in bad order and condition. Appellant found support to this
contention on the basis of the survey report of Worldwide Marine
Survey Corporation of the Philippines and of the Adjustment
Corporation of the Philippines which were identified by his sole
witness, Jose See. It must be pointed out, however, that witness
Jose See was incompetent to identify the two survey reports because
he was not actually present during the actual devanning of the
cargo, which fact was admitted by him, hence, he failed to prove
the authenticity of the aforesaid survey reports.
On the other hand, the evidence submitted by the appellee would
conclusively establish the fact that there was no damage suffered
by the subject cargo at the time of the devanning thereof. The
cargo, upon discharge from the vessel, was delivered to the custody
of the arrastre operator (E. Razon) under clean tally sheet (Exh.
6-FMIC). Moreover, the container van containing the cargo was found
with both its seal and lock intact. Article IV, paragraph 4 of the
Management Contract (Exh. 5) signed between the Bureau of Customs
and the Arrastre Operator provides:
4. Tally Sheets for Cargo Vans or Containers The contractor
shall give a clean tally sheet for cargo vans received by it in
good order and condition with locks, and seals intact.
The same cargo was in turn delivered into the possession of the
appellant by the arrastre operator at the pier in good order and
condition as shown by the clean gate passes (Exhs. 2 and 3) and the
delivery permit (Exh. 4). The clean gate passes were issued by
appellee arrastre operator covering the shipment in question, with
the conformity of the appellant's representative. The clean gate
passes provide in part:
. . . issuance of this Gate Pass constitutes delivery to and
receipt by consignee of the goods as described above, in good order
and condition, unless an accompanying B.O. (Bad Order) Certificate
duly issued and noted on the face of this Gate Pass appears.
These clean gate passes are undoubtedly important and vital
pieces of evidence. They are noted in the dorsal side of another
important piece of document which is the permit to deliver (Exh. 4)
issued by the Bureau of Customs to effect delivery of the cargo to
the consignee. The significance and value of these documents is
that they bind the shipping company and the arrastre operator
whenever a cargo sustains damage while in their respective custody.
It is worthy of note that there was no turn over survey executed
between the vessel and the arrastre operator, indicating any damage
to the cargo upon discharge from the custody of the vessel. There
was no bad order certificate issued by the appellee arrastre
operator, indicating likewise that there was no damage to the cargo
while in its custody.
It is surprising to the point that one could not believe that if
indeed there was really damage affecting the 403 bags out of the
600, with an alleged estimated spillage of 240%, this purportedly
big quantity of spillage was never recovered which could have been
easily done considering that the shipment was in a container van
which was found to be sealed and intact. 3However, in the same
decision of the appellate court, the following evidence of the
petitioner on this aspect was summarized as follows:
The 600 bags which the original carrier received in apparent
good order condition and certified to by the vessel's agent to be
weighing 15,300 kg. gross, were unloaded from the transhipment
vessel "Wesser Broker" stuffed in one container and turned over to
the arrastre operator, third party defendant-appellee E. Razon,
Inc. A shipboard surveyor, the Worldwide Marine Cargo Surveyor, as
well as a representative of the vessel "Wesser Broker" and a
representative of the arrastre operator attended the devanning of
the shipment and the said shipboard surveyor certified that 403
bags were in bad order condition with estimated spillage as
follows:
65 P/bags each of 20%78 P/bags each of 35%79 P/bags each of
45%87 P/bags each of 65%94 P/bags each of 75%(Exh. F-1)
Defendant and third-party plaintiff-appellee's protective
surveyor determined the exact spillage from the bad order bags as
found by the shipboard surveyor at the consignee's warehouse by
weighing the bad order bags. Said protective surveyor found after
weighing the 403 bags in bad order condition that an aggregate of
5,173 kilos were missing therefrom (Exh. F). 4The assertion of the
appellate court that the authenticity of the survey reports of the
Worldwide Marine Cargo Survey Corporation and the Adjustment
Corporation of the Philippines were not established as Jose See who
identified the same was incompetent as he was not actually present
during the actual devanning of the cargo is not well taken.
In the first place it was respondent insurance company which
undertook the protective survey aforestated relating to the goods
from the time of discharge up to the time of delivery thereof to
the consignee's warehouse, so that it is bound by the report of its
surveyor which is the Adjustment Corporation of the Philippines. 5
The Worldwide Marine Cargo Survey Corporation of the Philippines
was the vessel's surveyor. The survey report of the said Adjustment
Corporation of the Philippines reads as follows:During the
turn-over of the contents delivery from the cargo sea van by the
representative of the shipping agent to consignee's representative/
Broker (Saint Rose Forwarders), 403 bags were bursted and/or torn,
opened on one end contents partly spilled. The same were inspected
by the vessel's surveyor (Worldwide Marine & Cargo Survey
Corporation), findings as follows:
One (1) Container No. 2987789Property locked and secured with
Seal No. 18880.
FOUND:
197-Paper Bags (6-Ply each with One inner Plastic Lining Machine
Stitched with cotton Twine on Both ends. Containing Lactose Crystal
25 mesh Sep 061-09-03 in good order.
403-Bags, 6-ply torn and/or opened on one end, contents partly
spilled, estimated spillages as follows:
65 P/bags each of 20%78 P/bags each of 35%79 P/bags each of
45%87 P/bags each of 65%94 P/bags each of 75%(emphasis supplied)
6The authenticity of the said survey report need not be established
in evidence as it is binding on respondent insurance company who
caused said protective survey.
Secondly, contrary to the findings of the appellate court that
petitioner's witness Jose See was not present at the time of the
actual devanning of the cargo, what the record shows is that he was
present when the cargo was unloaded and received in the warehouse
of the consignee. He saw 403 bags to be in bad order. Present then
was the surveyor, Adjustment Corporation of the Philippines, who
surveyed the cargo by segregating the bad order cargo from the good
order and determined the amount of loss. 7 Thus, said witness was
indeed competent to identify the survey report aforestated.Thirdly,
in its letter dated May 26, 1977 to petitioner, respondent
insurance company admitted in no uncertain terms, the damages as
indicated in the survey report in this manner:
We do not question the fact that out of the 600 bags shipment
403 bags appeared to be in bad order or in damaged condition as
indicated in the survey report of the vessel surveyor. . . . 8This
admission even standing alone is sufficient proof of loss or damage
to the cargo.
The appellate court observed that the cargo was discharged from
the vessel and delivered to the custody of the broker under the
clean tally sheet, that the container van containing the cargo was
found with both its seal and lock intact; and that the cargo was
delivered to the possession of the petitioner by the broker in good
order and condition as shown by the clean gate passes and delivery
permit.
The clean tally sheet referred to by the appellate court covers
the van container and not the cargo stuffed therein. 9 The
appellate court clearly stated that the clean tally sheet issued by
the broker covers the cargo vans received by it in good order and
condition with lock and seal intact. Said tally sheet is no
evidence of the condition of the cargo therein contained. Even the
witness of the respondent insurance company, Sergio Icasiano,
stated that the clean gate passes do not reflect the actual
condition of the cargo when released by the broker as it was not
physically examined by the broker. 10There is no question,
therefore, that there were 403 bags in damaged condition delivered
and received by petitioner.
Nevertheless, on the assumption that the cargo suffered damages,
the appellate court ruled:
Even assuming that the cargo indeed sustained damage, still the
appellant cannot hold the appellee insurance company liable on the
insurance policy. In the case at bar, appellant failed to prove
that the alleged damage was due to risks connected with navigation.
A distinction should be made between "perils of the sea" which
render the insurer liable on account of the loss and/or damage
brought about thereof and "perils of the ship" which do not render
the insurer liable for any loss or damage. Perils of the sea or
perils of navigation embrace all kinds of marine casualties, such
as shipwreck, foundering, stranding, collision and every specie of
damage done to the ship or goods at sea by the violent action of
the winds or waves. They do not embrace all loses happening on the
sea. A peril whose only connection with the sea is that it arises
aboard ship is not necessarily a peril of the sea; the peril must
be of the sea and not merely one accruing on the sea (The Phil.
Insurance Law, by Guevarra, 4th ed., 1961, p. 143). In Wilson, Sons
and Co. vs. Owners of Cargo per the Xantho (1887) A.C. 503, 508, it
was held:
There must, in order to make the insurer liable be "some
casualty," something which could not be foreseen as one of the
necessary incidents of the adventure. The purpose of the policy is
to secure an indemnity against accidents which may happen, not
against events which must happen.
Moreover, the cargo in question was insured in an "against all
risk policy." Insurance "against all risk" has a technical meaning
in marine insurance. Under an "all risk" marine policy, there must
be a general rule be a fortuitous event in order to impose
liability on the insurer; losses occasioned by ordinary
circumstances or wear and tear are not covered, thus, while an "all
risk" marine policy purports to cover losses from casualties at
sea, it does not cover losses occasioned by the ordinary
circumstances of a voyage, but only those resulting from extra and
fortuitous events.
It has been held that damage to a cargo by high seas and other
weather is not covered by an "all risk" marine policy, since it is
not fortuitous, particularly where the bad weather occurs at a
place where it could be expected at the time in question. (44 Am.
Jur. 2d. 216) In Go Tiaoco y Hermanas vs. Union Insurance Society
of Canto, 40 Phil. 40, it was held:
In the present case, the entrance of the sea water into the
ship's hold through the defective pipe already described was not
due to any accident which happened during the voyage, but to the
failure of the ship's owner properly to repair a defect of the
existence of which he was apprised. The loss was therefore more
analogous to that which directly results from simple
unseaworthiness than to that whose results, from perils of the sea.
11The Court disagrees.
In Gloren Inc. vs. Filipinas Cia. de Seguros, 12 it was held
that an all risk insurance policy insures against all causes of
conceivable loss or damage, except as otherwise excluded in the
policy or due to fraud or intentional misconduct on the part of the
insured. It covers all losses during the voyage whether arising
from a marine peril or not, including pilferage losses during the
war.In the present case, the "all risks" clause of the policy sued
upon reads as follows:
5. This insurance is against all risks of loss or damage to the
subject matter insured but shall in no case be deemed to extend to
cover loss, damage, or expense proximately caused by delay or
inherent vice or nature of the subject matter insured. Claims
recoverable hereunder shall be payable irrespective of percentage.
13The terms of the policy are so clear and require no
interpretation. The insurance policy covers all loss or damage to
the cargo except those caused by delay or inherent vice or nature
of the cargo insured. It is the duty of the respondent insurance
company to establish that said loss or damage falls within the
exceptions provided for by law, otherwise it is liable
therefor.
An "all risks" provision of a marine policy creates a special
type of insurance which extends coverage to risks not usually
contemplated and avoids putting upon the insured the burden of
establishing that the loss was due to peril falling within the
policy's coverage. The insurer can avoid coverage upon
demonstrating that a specific provision expressly excludes the loss
from coverage. 14In this case, the damage caused to the cargo has
not been attributed to any of the exceptions provided for nor is
there any pretension to this effect. Thus, the liability of
respondent insurance company is clear.
WHEREFORE, the decision appealed from is hereby REVERSED AND SET
ASIDE and another judgment is hereby rendered ordering the
respondent Filipinas Merchants Insurance Company, Inc. to pay the
sum of P33,117.63 as damages to petitioner with legal interest from
the filing of the complaint, plus attorney's fees and expenses of
litigation in the amount of P10,000.00 as well as the costs of the
suit.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.
G.R. No. 85141 November 28, 1989
FILIPINO MERCHANTS INSURANCE CO., INC., petitioner, vs.COURT OF
APPEALS and CHOA TIEK SENG, respondents.
Balgos & Perez Law Offices for petitioner.
Lapuz Law office for private respondent.
REGALADO, J.:This is a review of the decision of the Court of
Appeals, promulgated on July 19,1988, the dispositive part of which
reads:
WHEREFORE, the judgment appealed from is affirmed insofar as it
orders defendant Filipino Merchants Insurance Company to pay the
plaintiff the sum of P51,568.62 with interest at legal rate from
the date of filing of the complaint, and is modified with respect
to the third party complaint in that (1) third party defendant E.
Razon, Inc. is ordered to reimburse third party plaintiff the sum
of P25,471.80 with legal interest from the date of payment until
the date of reimbursement, and (2) the third-party complaint
against third party defendant Compagnie Maritime Des Chargeurs
Reunis is dismissed. 1The facts as found by the trial court and
adopted by the Court of Appeals are as follows:
This is an action brought by the consignee of the shipment of
fishmeal loaded on board the vessel SS Bougainville and unloaded at
the Port of Manila on or about December 11, 1976 and seeks to
recover from the defendant insurance company the amount of
P51,568.62 representing damages to said shipment which has been
insured by the defendant insurance company under Policy No. M-2678.
The defendant brought a third party complaint against third party
defendants Compagnie Maritime Des Chargeurs Reunis and/or E. Razon,
Inc. seeking judgment against the third (sic) defendants in case
Judgment is rendered against the third party plaintiff. It appears
from the evidence presented that in December 1976, plaintiff
insured said shipment with defendant insurance company under said
cargo Policy No. M-2678 for the sum of P267,653.59 for the goods
described as 600 metric tons of fishmeal in new gunny bags of 90
kilos each from Bangkok, Thailand to Manila against all risks under
warehouse to warehouse terms. Actually, what was imported was
59.940 metric tons not 600 tons at $395.42 a ton CNF Manila. The
fishmeal in 666 new gunny bags were unloaded from the ship on
December 11, 1976 at Manila unto the arrastre contractor E. Razon,
Inc. and defendant's surveyor ascertained and certified that in
such discharge 105 bags were in bad order condition as jointly
surveyed by the ship's agent and the arrastre contractor. The
condition of the bad order was reflected in the turn over survey
report of Bad Order cargoes Nos. 120320 to 120322, as Exhibit C-4
consisting of three (3) pages which are also Exhibits 4, 5 and 6-
Razon. The cargo was also surveyed by the arrastre contractor
before delivery of the cargo to the consignee and the condition of
the cargo on such delivery was reflected in E. Razon's Bad Order
Certificate No. 14859, 14863 and 14869 covering a total of 227 bags
in bad order condition. Defendant's surveyor has conducted a final
and detailed survey of the cargo in the warehouse for which he
prepared a survey report Exhibit F with the findings on the extent
of shortage or loss on the bad order bags totalling 227 bags
amounting to 12,148 kilos, Exhibit F-1. Based on said computation
the plaintiff made a formal claim against the defendant Filipino
Merchants Insurance Company for P51,568.62 (Exhibit C) the
computation of which claim is contained therein. A formal claim
statement was also presented by the plaintiff against the vessel
dated December 21, 1976, Exhibit B, but the defendant Filipino
Merchants Insurance Company refused to pay the claim. Consequently,
the plaintiff brought an action against said defendant as adverted
to above and defendant presented a third party complaint against
the vessel and the arrastre contractor. 2The court below, after
trial on the merits, rendered judgment in favor of private
respondent, the decretal portion whereof reads:
WHEREFORE, on the main complaint, judgment is hereby rendered in
favor of the plaintiff and against the defendant Filipino
Merchant's (sic) Insurance Co., ordering the defendants to pay the
plaintiff the following amount:
The sum of P51,568.62 with interest at legal rate from the date
of the filing of the complaint;
On the third party complaint, the third party defendant
Compagnie Maritime Des Chargeurs Reunis and third party defendant
E. Razon, Inc. are ordered to pay to the third party plaintiff
jointly and severally reimbursement of the amounts paid by the
third party plaintiff with legal interest from the date of such
payment until the date of such reimbursement.
Without pronouncement as to costs. 3On appeal, the respondent
court affirmed the decision of the lower court insofar as the award
on the complaint is concerned and modified the same with regard to
the adjudication of the third-party complaint. A motion for
reconsideration of the aforesaid decision was denied, hence this
petition with the following assignment of errors:
1. The Court of Appeals erred in its interpretation and
application of the "all risks" clause of the marine insurance
policy when it held the petitioner liable to the private respondent
for the partial loss of the cargo, notwithstanding the clear
absence of proof of some fortuitous event, casualty, or accidental
cause to which the loss is attributable, thereby contradicting the
very precedents cited by it in its decision as well as a prior
decision of the same Division of the said court (then composed of
Justices Cacdac, Castro-Bartolome, and Pronove);
2. The Court of Appeals erred in not holding that the private
respondent had no insurable interest in the subject cargo, hence,
the marine insurance policy taken out by private respondent is null
and void;
3. The Court of Appeals erred in not holding that the private
respondent was guilty of fraud in not disclosing the fact, it being
bound out of utmost good faith to do so, that it had no insurable
interest in the subject cargo, which bars its recovery on the
policy. 4On the first assignment of error, petitioner contends that
an "all risks" marine policy has a technical meaning in insurance
in that before a claim can be compensable it is essential that
there must be "some fortuity, " "casualty" or "accidental cause" to
which the alleged loss is attributable and the failure of herein
private respondent, upon whom lay the burden, to adduce evidence
showing that the alleged loss to the cargo in question was due to a
fortuitous event precludes his right to recover from the insurance
policy. We find said contention untenable.
The "all risks clause" of the Institute Cargo Clauses read as
follows:
5. This insurance is against all risks of loss or damage to the
subject-matter insured but shall in no case be deemed to extend to
cover loss, damage, or expense proximately caused by delay or
inherent vice or nature of the subject-matter insured. Claims
recoverable hereunder shall be payable irrespective of percentage.
5An "all risks policy" should be read literally as meaning all
risks whatsoever and covering all losses by an accidental cause of
any kind. The terms "accident" and "accidental", as used in
insurance contracts, have not acquired any technical meaning. They
are construed by the courts in their ordinary and common
acceptance. Thus, the terms have been taken to mean that which
happens by chance or fortuitously, without intention and design,
and which is unexpected, unusual and unforeseen. An accident is an
event that takes place without one's foresight or expectation; an
event that proceeds from an unknown cause, or is an unusual effect
of a known cause and, therefore, not expected. 6The very nature of
the term "all risks" must be given a broad and comprehensive
meaning as covering any loss other than a willful and fraudulent
act of the insured. 7 This is pursuant to the very purpose of an
"all risks" insurance to give protection to the insured in those
cases where difficulties of logical explanation or some mystery
surround the loss or damage to property. 8 An "all asks" policy has
been evolved to grant greater protection than that afforded by the
"perils clause," in order to assure that no loss can happen through
the incidence of a cause neither insured against nor creating
liability in the ship; it is written against all losses, that is,
attributable to external causes. 9The term "all risks" cannot be
given a strained technical meaning, the language of the clause
under the Institute Cargo Clauses being unequivocal and clear, to
the effect that it extends to all damages/losses suffered by the
insured cargo except (a) loss or damage or expense proximately
caused by delay, and (b) loss or damage or expense proximately
caused by the inherent vice or nature of the subject matter
insured.
Generally, the burden of proof is upon the insured to show that
a loss arose from a covered peril, but under an "all risks" policy
the burden is not on the insured to prove the precise cause of loss
or damage for which it seeks compensation. The insured under an
"all risks insurance policy" has the initial burden of proving that
the cargo was in good condition when the policy attached and that
the cargo was damaged when unloaded from the vessel; thereafter,
the burden then shifts to the insurer to show the exception to the
coverage. 10 As we held in Paris-Manila Perfumery Co. vs. Phoenix
Assurance Co., Ltd. 11 the basic rule is that the insurance company
has the burden of proving that the loss is caused by the risk
excepted and for want of such proof, the company is liable.Coverage
under an "all risks" provision of a marine insurance policy creates
a special type of insurance which extends coverage to risks not
usually contemplated and avoids putting upon the insured the burden
of establishing that the loss was due to the peril falling within
the policy's coverage; the insurer can avoid coverage upon
demonstrating that a specific provision expressly excludes the loss
from coverage. 12 A marine insurance policy providing that the
insurance was to be "against all risks" must be construed as
creating a special insurance and extending to other risks than are
usually contemplated, and covers all losses except such as arise
from the fraud of the insured. 13 The burden of the insured,
therefore, is to prove merely that the goods he transported have
been lost, destroyed or deteriorated. Thereafter, the burden is
shifted to the insurer to prove that the loss was due to excepted
perils. To impose on the insured the burden of proving the precise
cause of the loss or damage would be inconsistent with the broad
protective purpose of "all risks" insurance.In the present case,
there being no showing that the loss was caused by any of the
excepted perils, the insurer is liable under the policy. As aptly
stated by the respondent Court of Appeals, upon due consideration
of the authorities and jurisprudence it discussed
... it is believed that in the absence of any showing that the
losses/damages were caused by an excepted peril, i.e. delay or the
inherent vice or nature of the subject matter insured, and there is
no such showing, the lower court did not err in holding that the
loss was covered by the policy.
There is no evidence presented to show that the condition of the
gunny bags in which the fishmeal was packed was such that they
could not hold their contents in the course of the necessary
transit, much less any evidence that the bags of cargo had burst as
the result of the weakness of the bags themselves. Had there been
such a showing that spillage would have been a certainty, there may
have been good reason to plead that there was no risk covered by
the policy (See Berk vs. Style [1956] cited in Marine Insurance
Claims, Ibid, p. 125). Under an 'all risks' policy, it was
sufficient to show that there was damage occasioned by some
accidental cause of any kind, and there is no necessity to point to
any particular cause. 14Contracts of insurance are contracts of
indemnity upon the terms and conditions specified in the policy.
The agreement has the force of law between the parties. The terms
of the policy constitute the measure of the insurer's liability. If
such terms are clear and unambiguous, they must be taken and
understood in their plain, ordinary and popular sense. 15Anent the
issue of insurable interest, we uphold the ruling of the respondent
court that private respondent, as consignee of the goods in transit
under an invoice containing the terms under "C & F Manila," has
insurable interest in said goods.
Section 13 of the Insurance Code defines insurable interest in
property as every interest in property, whether real or personal,
or any relation thereto, or liability in respect thereof, of such
nature that a contemplated peril might directly damnify the
insured. In principle, anyone has an insurable interest in property
who derives a benefit from its existence or would suffer loss from
its destruction whether he has or has not any title in, or lien
upon or possession of the property y. 16 Insurable interest in
property may consist in (a) an existing interest; (b) an inchoate
interest founded on an existing interest; or (c) an expectancy,
coupled with an existing interest in that out of which the
expectancy arises. 17Herein private respondent, as vendee/consignee
of the goods in transit has such existing interest therein as may
be the subject of a valid contract of insurance. His interest over
the goods is based on the perfected contract of sale. 18 The
perfected contract of sale between him and the shipper of the goods
operates to vest in him an equitable title even before delivery or
before be performed the conditions of the sale. 19 The contract of
shipment, whether under F.O.B., C.I.F., or C. & F. as in this
case, is immaterial in the determination of whether the vendee has
an insurable interest or not in the goods in transit. The perfected
contract of sale even without delivery vests in the vendee an
equitable title, an existing interest over the goods sufficient to
be the subject of insurance.Further, Article 1523 of the Civil Code
provides that where, in pursuance of a contract of sale, the seller
is authorized or required to send the goods to the buyer, delivery
of the goods to a carrier, whether named by the buyer or not, for,
the purpose of transmission to the buyer is deemed to be a delivery
of the goods to the buyer, the exceptions to said rule not
obtaining in the present case. The Court has heretofore ruled that
the delivery of the goods on board the carrying vessels partake of
the nature of actual delivery since, from that time, the foreign
buyers assumed the risks of loss of the goods and paid the
insurance premium covering them. 20C & F contracts are shipment
contracts. The term means that the price fixed includes in a lump
sum the cost of the goods and freight to the named destination. 21
It simply means that the seller must pay the costs and freight
necessary to bring the goods to the named destination but the risk
of loss or damage to the goods is transferred from the seller to
the buyer when the goods pass the ship's rail in the port of
shipment. 22Moreover, the issue of lack of insurable interest was
not among the defenses averred in petitioners answer. It was
neither an issue agreed upon by the parties at the pre-trial
conference nor was it raised during the trial in the court below.
It is a settled rule that an issue which has not been raised in the
court a quo cannot be raised for the first time on appeal as it
would be offensive to the basic rules of fair play, justice and due
process. 23 This is but a permuted restatement of the long settled
rule that when a party deliberately adopts a certain theory, and
the case is tried and decided upon that theory in the court below,
he will not be permitted to change his theory on appeal because, to
permit him to do so, would be unfair to the adverse party. 24If
despite the fundamental doctrines just stated, we nevertheless
decided to indite a disquisition on the issue of insurable interest
raised by petitioner, it was to put at rest all doubts on the
matter under the facts in this case and also to dispose of
petitioner's third assignment of error which consequently needs no
further discussion.
WHEREFORE, the instant petition is DENIED and the assailed
decision of the respondent Court of Appeals is AFFIRMED in
toto.
SO ORDERED.
Paras, Padilla and Sarmiento, JJ., concur.Melencio-Herrera
(Chairperson), J., is on leave.
[G.R. No. 131166. September 30, 1999]CALTEX (PHILIPPINES), INC.
petitioner, vs. SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO,
EUSEBIO S. GO, CARLOS S. GO, VICTORIANO S. GO, DOMINADOR S. GO,
RICARDO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR S. GO, EDMUND S.
GO, FRANCISCO SORIANO, VECTOR SHIPPING CORPORATION, TERESITA G.
CAEZAL AND SOTERA E. CAEZAL, respondents.
D E C I S I O N
PARDO, J.:
Is the charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger
ship?When MT Vector left the port of Limay, Bataan, on December 19,
1987 carrying petroleum products of Caltex (Philippines), Inc.
(hereinafter Caltex) no one could have guessed that it would
collide with MV Doa Paz, killing almost all the passengers and crew
members of both ships, and thus resulting in one of the countrys
worst maritime disasters.The petition before us seeks to reverse
the Court of Appeals decision[1]holding petitioner jointly liable
with the operator of MT Vector for damages when the latter collided
with Sulpicio Lines, Inc.s passenger ship MV Doa Paz.The facts are
as follows:On December 19, 1987, motor tanker MT Vector left Limay,
Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by petitioner Caltex.[2] MT
Vector is a tramping motor tanker owned and operated by Vector
Shipping Corporation, engaged in the business of transporting fuel
products such as gasoline, kerosene, diesel and crude oil. During
that particular voyage, the MT Vector carried on board gasoline and
other oil products owned by Caltex by virtue of a charter contract
between them.[3]On December 20, 1987, at about 6:30 a.m., the
passenger ship MV Doa Paz left the port of Tacloban headed for
Manila with a complement of 59 crew members including the master
and his officers, and passengers totaling 1,493 as indicated in the
Coast Guard Clearance.[4] The MV Doa Paz is a passenger and cargo
vessel owned and operated by Sulpicio Lines, Inc. plying the route
of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/
Manila, making trips twice a week.At about 10:30 p.m. of December
20, 1987, the two vessels collided in the open sea within the
vicinity of Dumali Point between Marinduque and Oriental Mindoro.
All the crewmembers of MV Doa Paz died, while the two survivors
from MT Vector claimed that they were sleeping at the time of the
incident.The MV Doa Paz carried an estimated 4,000 passengers; many
indeed, were not in the passenger manifest. Only 24 survived the
tragedy after having been rescued from the burning waters by
vessels that responded to distress calls.[5] Among those who
perished were public school teacher Sebastian Caezal (47 years old)
and his daughter Corazon Caezal (11 years old), both unmanifested
passengers but proved to be on board the vessel.On March 22, 1988,
the board of marine inquiry in BMI Case No. 653-87 after
investigation found that the MT Vector, its registered operator
Francisco Soriano, and its owner and actual operator Vector
Shipping Corporation, were at fault and responsible for its
collision with MV Doa Paz.[6]On February 13, 1989, Teresita Caezal
and Sotera E. Caezal, Sebastian Caezals wife and mother
respectively, filed with the Regional Trial Court, Branch 8,
Manila, a complaint for Damages Arising from Breach of Contract of
Carriage against Sulpicio Lines, Inc. (hereafter Sulpicio).
Sulpicio, in turn, filed a third party complaint against Francisco
Soriano, Vector Shipping Corporation and Caltex (Philippines), Inc.
Sulpicio alleged that Caltex chartered MT Vector with gross and
evident bad faith knowing fully well that MT Vector was improperly
manned, ill-equipped, unseaworthy and a hazard to safe navigation;
as a result, it rammed against MV Doa Paz in the open sea setting
MT Vectors highly flammable cargo ablaze.On September 15, 1992, the
trial court rendered decision dismissing the third party complaint
against petitioner. The dispositive portion reads:WHEREFORE,
judgement is hereby rendered in favor of plaintiffs and against
defendant-3rd party plaintiff Sulpicio Lines, Inc., to wit:
1. For the death of Sebastian E. Caezal and his 11-year old
daughter Corazon G. Caezal, including loss of future earnings of
said Sebastian, moral and exemplary damages, attorneys fees, in the
total amount of P 1,241,287.44 and finally;
2. The statutory costs of the proceedings.
Likewise, the 3rd party complaint is hereby DISMISSED for want
of substantiation and with costs against the 3rd party
plaintiff.
IT IS SO ORDERED.DONE IN MANILA, this 15th day of September
1992.
ARSENIO M. GONONG Judge[7]On appeal to the Court of Appeals
interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of
Appeal modified the trial courts ruling and included petitioner
Caltex as one of the those liable for damages. Thus:WHEREFORE, in
view of all the foregoing, the judgment rendered by the Regional
Trial Court is hereby MODIFIED as follows:
WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the
heirs of Sebastian E. Caezal and Corazon Caezal:
1. Compensatory damages for the death of Sebastian E.Caezal and
Corazon Caezal the total amount of ONE HUNDRED THOUSAND PESOS
(P100,000);
2. Compensatory damages representing the unearned income of
Sebastian E. Caezal, in the total amount of THREE HUNDRED SIX
THOUSAND FOUR HUNDRED EIGHTY (P306,480.00) PESOS;
3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS
(P 300,000.00);
4. Attorneys fees in the concept of actual damages in the amount
of FIFTY THOUSAND PESOS (P 50,000.00);
5. Costs of the suit.
Third party defendants Vector Shipping Co. and Caltex (Phils.),
Inc. are held equally liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. of the
above-mentioned damages, attorneys fees and costs which the latter
is adjudged to pay plaintiffs, the same to be shared half by Vector
Shipping Co. (being the vessel at fault for the collision) and the
other half by Caltex (Phils.), Inc. (being the charterer that
negligently caused the shipping of combustible cargo aboard an
unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL Associate Justice
WE CONCUR:RAMON U. MABUTAS. JR. PORTIA ALIO HERMACHUELOS
Associate Justice Associate Justice[8]Hence, this petition.We
find the petition meritorious.First: The charterer has no liability
for damages under Philippine Maritime laws.The respective rights
and duties of a shipper and the carrier depends not on whether the
carrier is public or private, but on whether the contract of
carriage is a bill of lading or equivalent shipping documents on
the one hand, or a charter party or similar contract on the
other.[9]Petitioner and Vector entered into a contract of
affreightment, also known as a voyage charter.[10]A charter party
is a contract by which an entire ship, or some principal part
thereof, is let by the owner to another person for a specified time
or use; a contract of affreightment is one by which the owner of a
ship or other vessel lets the whole or part of her to a merchant or
other person for the conveyance of goods, on a particular voyage,
in consideration of the payment of freight.[11]A contract of
affreightment may be either time charter, wherein the leased vessel
is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. In both
cases, the charter-party provides for the hire of the vessel only,
either for a determinate period of time or for a single or
consecutive voyage, the ship owner to supply the ships store, pay
for the wages of the master of the crew, and defray the expenses
for the maintenance of the ship.[12]Under a demise or bareboat
charter on the other hand, the charterer mans the vessel with his
own people and becomes, in effect, the owner for the voyage or
service stipulated, subject to liability for damages caused by
negligence.If the charter is a contract of affreightment, which
leaves the general owner in possession of the ship as owner for the
voyage, the rights and the responsibilities of ownership rest on
the owner. The charterer is free from liability to third persons in
respect of the ship.[13]Second : MT Vector is a common
carrierCharter parties fall into three main categories: (1) Demise
or bareboat, (2) time charter, (3) voyage charter. Does a charter
party agreement turn the common carrier into a private one? We need
to answer this question in order to shed light on the
responsibilities of the parties.In this case, the charter party
agreement did not convert the common carrier into a private
carrier. The parties entered into a voyage charter, which retains
the character of the vessel as a common carrier.In Planters
Products, Inc. vs. Court of Appeals,[14] we said:It is therefore
imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by
one or more persons, provided the charter is limited to the ship
only, as in the case of a time-charter or voyage charter. It is
only when the charter includes both the vessel and its crew, as in
a bareboat or demise that a common carrier becomes private, at
least insofar as the particular voyage covering the charter-party
is concerned. Indubitably, a ship-owner in a time or voyage charter
retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of
Appeals:[15]Although a charter party may transform a common carrier
into a private one, the same however is not true in a contract of
affreightment xxx
A common carrier is a person or corporation whose regular
business is to carry passengers or property for all persons who may
choose to employ and to remunerate him.[16] MT Vector fits the
definition of a common carrier under Article 1732 of the Civil
Code. In Guzman vs. Court of Appeals,[17] we ruled:The Civil Code
defines common carriers in the following terms:Article 1732. Common
carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers for
passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity
(in local idiom, as a sideline). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one
offering such services on a an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We
think that Article 1733 deliberately refrained from making such
distinctions.
It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely back-hauled
goods for other merchants from Manila to Pangasinan, although such
backhauling was done on a periodic, occasional rather than regular
or scheduled manner, and even though respondents principal
occupation was not the carriage of goods for others. There is no
dispute that private respondent charged his customers a fee for
hauling their goods; that the fee frequently fell below commercial
freight rates is not relevant here.
Under the Carriage of Goods by Sea Act :Sec. 3. (1) The carrier
shall be bound before and at the beginning of the voyage to
exercise due diligence to -
(a) Make the ship seaworthy;(b) Properly man, equip, and supply
the ship;
xxx xxx xxxThus, the carriers are deemed to warrant impliedly
the seaworthiness of the ship. For a vessel to be seaworthy, it
must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a
common carrier to maintain in seaworthy condition the vessel
involved in its contract of carriage is a clear breach of its duty
prescribed in Article 1755 of the Civil Code.[18]The provisions
owed their conception to the nature of the business of common
carriers. This business is impressed with a special public duty.
The public must of necessity rely on the care and skill of common
carriers in the vigilance over the goods and safety of the
passengers, especially because with the modern development of
science and invention, transportation has become more rapid, more
complicated and somehow more hazardous.[19] For these reasons, a
passenger or a shipper of goods is under no obligation to conduct
an inspection of the ship and its crew, the carrier being obliged
by law to impliedly warrant its seaworthiness.This aside, we now
rule on whether Caltex is liable for damages under the Civil
Code.Third: Is Caltex liable for damages under the Civil Code?We
rule that it is not.Sulpicio argues that Caltex negligently shipped
its highly combustible fuel cargo aboard an unseaworthy vessel such
as the MT Vector when Caltex:1. Did not take steps to have M/T
Vectors certificate of inspection and coastwise license
renewed;
2. Proceeded to ship its cargo despite defects found by Mr.
Carlos Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and
certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector to transport
its cargo despite these deficiencies:1. The master of M/T Vector
did not posses the required Chief Mate license to command and
navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor
Patron, authorized to navigate only in bays and rivers when the
subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate
the engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and a
lookout; and
5. The vessel had a defective main engine.[20]As basis for the
liability of Caltex, the Court of Appeals relied on Articles 20 and
2176 of the Civil Code, which provide:Article 20. - Every person
who contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
Article 2176. - Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
And what is negligence?The Civil Code provides:Article 1173. The
fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and
of the place. When negligence shows bad faith, the provisions of
Article 1171 and 2201 paragraph 2, shall apply.
If the law does not state the diligence which is to be observed
in the performance, that which is expected of a good father of a
family shall be required.
In Southeastern College, Inc. vs. Court of Appeals,[21] we said
that negligence, as commonly understood, is conduct which naturally
or reasonably creates undue risk or harm to others. It may be the
failure to observe that degree of care, precaution, and vigilance,
which the circumstances justly demand, or the omission to do
something which ordinarily regulate the conduct of human affairs,
would do.The charterer of a vessel has no obligation before
transporting its cargo to ensure that the vessel it chartered
complied with all legal requirements. The duty rests upon the
common carrier simply for being engaged in public service.[22] The
Civil Code demands diligence which is required by the nature of the
obligation and that which corresponds with the circumstances of the
persons, the time and the place. Hence, considering the nature of
the obligation between Caltex and MT Vector, the liability as found
by the Court of Appeals is without basis.The relationship between
the parties in this case is governed by special laws. Because of
the implied warranty of seaworthiness,[23] shippers of goods, when
transacting with common carriers, are not expected to inquire into
the vessels seaworthiness, genuineness of its licenses and
compliance with all maritime laws. To demand more from shippers and
hold them liable in case of failure exhibits nothing but the
futility of our maritime laws insofar as the protection of the
public in general is concerned. By the same token, we cannot expect
passengers to inquire every time they board a common carrier,
whether the carrier possesses the necessary papers or that all the
carriers employees are qualified. Such a practice would be an
absurdity in a business where time is always of the essence.
Considering the nature of transportation business, passengers and
shippers alike customarily presume that common carriers possess all
the legal requisites in its operation.Thus, the nature of the
obligation of Caltex demands ordinary diligence like any other
shipper in shipping his cargoes.A cursory reading of the records
convinces us that Caltex had reasons to believe that MT Vector
could legally transport cargo that time of the year.Atty. Poblador:
Mr. Witness, I direct your attention to this portion here
containing the entries here under VESSELS DOCUMENTS1. Certificate
of Inspection No. 1290-85, issued December 21, 1986, and Expires
December 7, 1987, Mr. Witness, what steps did you take regarding
the impending expiry of the C.I. or the Certificate of Inspection
No. 1290-85 during the hiring of MT Vector?
Apolinar Ng: At the time when I extended the Contract, I did
nothing because the tanker has a valid C.I. which will expire on
December 7, 1987 but on the last week of November, I called the
attention of Mr. Abalos to ensure that the C.I. be renewed and Mr.
Abalos, in turn, assured me they will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from
Mr. Abalos, and said they were going to send me a copy as soon as
possible, sir.[24]xxx xxx xxx Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the C.I. from Mr.
Abalos on the first place, because of our long business relation,
we trust Mr. Abalos and the fact that the vessel was able to sail
indicates that the documents are in order. xxx[25]On cross
examination - Atty. Sarenas: This being the case, and this being an
admission by you, this Certificate of Inspection has expired on
December 7. Did it occur to you not to let the vessel sail on that
day because of the very approaching date of expiration?
Apolinar Ng: No sir, because as I said before, the operation
Manager assured us that they were able to secure a renewal of the
Certificate of Inspection and that they will in time submit us a
copy.[26]Finally, on Mr. Ngs redirect examination: Atty. Poblador:
Mr. Witness, were you aware of the pending expiry of the
Certificate of Inspection in the coastwise license on December 7,
1987. What was your assurance for the record that this document was
renewed by the MT Vector?
Atty. Sarenas: xxx
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a long
time business partner; secondly, those three years, they were
allowed to sail by the Coast Guard. That are some that make me
believe that they in fact were able to secure the necessary
renewal.
Q: If the Coast Guard clears a vessel to sail, what would that
mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the
effect that if it was allowed, referring to MV Vector, to sail,
where it is loaded and that it was scheduled for a destination by
the Coast Guard, it means that it has Certificate of Inspection
extended as assured to this witness by Restituto Abalos. That in no
case MV Vector will be allowed to sail if the Certificate of
Inspection is, indeed, not to be extended. That was his repeated
explanation to the cross-examination. So, there is no need to
clarify the same in the re-direct examination.[27]Caltex and Vector
Shipping Corporation had been doing business since 1985, or for
about two years before the tragic incident occurred in 1987. Past
services rendered showed no reason for Caltex to observe a higher
degree of diligence.Clearly, as a mere voyage charterer, Caltex had
the right to presume that the ship was seaworthy as even the
Philippine Coast Guard itself was convinced of its seaworthiness.
All things considered, we find no legal basis to hold petitioner
liable for damages.As Vector Shipping Corporation did not appeal
from the Court of Appeals decision, we limit our ruling to the
liability of Caltex alone. However, we maintain the Court of
Appeals ruling insofar as Vector is concerned .WHEREFORE, the Court
hereby GRANTS the petition and SETS ASIDE the decision of the Court
of Appeals in CA-G. R. CV No. 39626, promulgated on April 15, 1997,
insofar as it held Caltex liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. the damages the
latter is adjudged to pay plaintiffs-appellees. The Court AFFIRMS
the decision of the Court of Appeals insofar as it orders Sulpicio
Lines, Inc. to pay the heirs of Sebastian E. Caezal and Corazon
Caezal damages as set forth therein. Third-party defendant-appellee
Vector Shipping Corporation and Francisco Soriano are held liable
to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever
damages, attorneys fees and costs the latter is adjudged to pay
plaintiffs-appellees in the case.No costs in this instance. SO
ORDERED.Davide, Jr., C.J., (Chairman), Kapunan, and
Ynares-Santiago, JJ., concur.Puno, J., took no part due to close
relation with a party.[G.R. No. 141716. July 4, 2002]SAN MIGUEL
CORPORATION, petitioner, vs. HEIRS OF SABINIANO INGUITO, and JULIUS
OUANO, respondents.[G.R. No. 142025. July 4, 2002]JULIUS C. OUANO,
petitioner, vs. THE COURT OF APPEALS, SAN MIGUEL CORPORATION and
THE HEIRS OF SABINIANO INGIUTO, FELIPE PUSA, ABUNDIO GALON, I